Fed raises short term rate for 3rd time in 2018

By: The Associated Press September 26, 2018Comments Off on Fed raises short term rate for 3rd time in 2018

Federal Reserve officials voted Wednesday to raise a key, short term interest rate for the third time this year.

Investors largely expected an increase in the federal funds rate — the interest that banks charge each other — based off public statements by Fed officials. The fed funds rate was increased to a range of 2 percent to 2.25 percent, up from a level of near-zero between the end of 2008 and late 2015.

The higher range points to an improving U.S. economy with inflation staying near the Fed’s target of 2 percent. The vote to raise rates was 9 to 0.

Federal Reserve policymakers expect to hike rates one more time this year, three times next year and only once in 2020, the same as they forecast in June, according to projections released after a two-day meeting.

In their statement announcing the decision, Fed officials removed a sentence in prior statements that said its interest rate policy was supporting a strong job market and a return to 2 percent inflation. By eliminating that statement, they’re suggesting that those goals are now within reach and that rate hikes will likely continue.